In damage control mode after SVB collapse, Biden assures US banking system is ‘safe’

Merely hours after the collapsed Silicon Valley Bank (SVB) was put up for auction, US President Joe Biden took the mic to calm the frayed nerves both in US and across the world. He assured all that American banking system was “safe”.

“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” Biden said in televised remarks from the White House after Silicon Valley Bank’s failure and the federal takeover of a second bank.

Watch | US regulators rush to contain SVB fallout, as a second bank fails

While the government is ensuring that SVB depositors get their money back, “no losses will be borne by the taxpayers,” Biden said. 

“The money will come from the fees that banks pay into the deposit insurance.”

Biden emphatically asked the US Congress for tougher laws and regulations for banking sector. He said “tough” safeguards that had been brought in after 2008 financial crisis had be undone during the tenure of his predecessor Donald Trump.

“I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure would happen again,” Biden said.

The US president made clear his expectation that the consequences of SVC collapse fall on shoulders of those who are responsible for the crisis. He added that the government’s rapid response over the weekend was not a bank bailout, as happened in 2008.

“We must get the full accounting of what happened and why, (so) those responsible can be held accountable,” he said.

Not only will taxpayers not be liable for covering the deposits, but “the management of these banks will be fired,” he said.

Once a bank is taken over by the government, “the people running the bank should not work there anymore.”

Biden stressed that investors who bought into SVB were not getting bailed out.

(With inputs from agencies)

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